Civil Procedure Flashcards
(7 cards)
Summary
When litigation is reasonably anticipated and even before a lawsuit is filed, a party is obligated to preserve evidence, including electronically stored information (ESI), that may be relevant to the litigation. In such situations, the party must place a “litigation hold” on such evidence and suspend any pre-existing record-retention policies that might result in the destruction of the records. Here, the supermarket’s destruction of the video recording of the peach-display incident and the woman’s fall, along with the supermarket’s failure to suspend its record-retention policy, violated its duty to preserve this ESI evidence.
Generally, when a party fails to produce documents or tangible things, including ESI, without justification, a federal district court has broad discretion to impose a variety of sanctions. The sanctions that are appropriate depend on a range of factors including whether the lost information can be replaced in some way and whether the non-producing party acted with the intent to prevent the information from being used in the litigation.
Substantial sanctions are appropriate here. The facts state that the video recording sought by the woman cannot be recovered, and comparable evidence of the peach-display incident and the woman’s fall is not likely to be available to replace it. Further, the supermarket had a clear obligation to preserve the ESI evidence at the time it was destroyed, the supermarket’s owner acted with a culpable state of mind, and the destruction of the evidence was prejudicial to the woman. Given this misbehavior, the court should, at the least, give an adverse inference instruction. The more serious sanction of entering a default judgment for the woman, however, may not be appropriate if other evidence is available showing how the peach-display incident and the fall occurred.
The supermarket was under a duty to preserve relevant information, including the electronically stored video recording sought by the woman, given that litigation was reasonably anticipated when the video recording was destroyed.
When litigation is reasonably anticipated, whether or not it has been commenced, potential litigants in possession of evidence (including ESI evidence) that may be relevant to that litigation have a duty to preserve that evidence. See Silvestri v. Gen’l Motors Corp., 271 F.3d 583, 591 (4th Cir. 2001) (“The duty to preserve material evidence . . . extends to that period before the litigation when a party reasonably should know that the evidence may be relevant to anticipated litigation.”); Kronisch v. United States, 150 F.3d 112, 126 (2d Cir. 1998) (“The obligation to preserve evidence arises when the party has notice that the evidence is relevant to litigation . . . [or] when a party should have known that the evidence may be relevant to future litigation.”); Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 217 (S.D.N.Y. 2003) (“duty to preserve attached at the time that litigation was reasonably anticipated”).
The mere existence of a dispute between the parties does not give rise to an obligation to preserve relevant information. Instead, “future litigation must be ‘probable,’ which has been held to mean ‘more than a possibility.’” In re Napster, Inc. Copyright Litig., 462 F. Supp. 2d 1060, 1068 (N.D. Cal. 2006) (citations omitted). Thus, a letter from the plaintiff to the defendant stating a clear intent to sue and specifying the nature of the claim triggers an obligation to preserve. See, e.g., Stallings v. Bil-Jax, Inc., 243 F.R.D. 248, 252 (E.D. Va. 2007) (explaining that, “[a]lthough this letter should have been more specific, it provided some notice to Home Depot that Stallings might bring a lawsuit against it”). In addition, “[p]roperly crafted pre-litigation preservation letters can impose the duty of preservation.” Shira A. Scheindlin And Daniel J. Capra, Electronic Discovery and Digital Evidence: Cases and Materials 128 (3d ed. 2015).
Application
Here, the letter from the woman’s attorney put the supermarket on clear notice of impending litigation arising from the woman’s fall in the store and specifically requested that the supermarket preserve any video recording of the peach-display incident and the woman’s fall. There is no doubt that the supermarket’s duty to preserve was triggered no later than the date when its owner received that letter.
Once a duty to preserve information has attached, a party that anticipates litigation must take “reasonable steps to preserve the information.” Committee Notes on Rules—2015 Amendments to Rule 37(e). In particular, when a party has in place a policy calling for routine operations that may result in the destruction of electronically stored information, that “party needs to act affirmatively to prevent the system from destroying or altering information, even if such destruction would occur in the regular course of business.” Doe v. Norwalk Community College, 248 F.R.D. 372, 378 (D. Conn. 2007).
Here, the requirement in Rule 37(e) for parties to take “reasonable steps to preserve” information means that the supermarket had a duty to preserve the recording, which it knew was highly relevant to the woman’s planned lawsuit. The fact that it had a policy requiring the regular deletion of old video recordings is no justification for the actions taken in this case.
A court considering whether to impose sanctions for a party’s failure to preserve electronically stored information should evaluate a number of factors, including whether additional discovery would allow the restoration or replacement of the lost information, whether the failure to preserve the information was intended to deprive another party of the information’s use, and the extent to which that party was prejudiced.
Rule 37 of the Federal Rules of Civil Procedure expressly addresses the sanctions that may be imposed when a party fails to take reasonable steps to preserve ESI that should have been preserved in anticipation of litigation. The rule authorizes sanctions only if the information “cannot be restored or replaced through additional discovery.” In some cases, for example, the “lost” information may be retrievable from sources that would normally be considered inaccessible because of the cost of retrieval. See Fed. R. Civ. P. 26(b)(2)(B). When such retrieval is possible, a court can require it and shift the costs to the party that destroyed the more accessible electronic record but may not impose other sanctions. See Committee Notes on Rules—2015 Amendments to Rule 37(e). Where there is no alternative source of the lost information, additional sanctions may be appropriate.
If a party is prejudiced by another party’s failure to preserve electronic information, Rule 37(e)(1) authorizes a court to impose sanctions in the form of “measures no greater than necessary to cure the prejudice.” The precise measures to use are “entrusted to the court’s discretion.” Much depends on the degree of prejudice and the means available to cure it. Serious measures might include “forbidding the party that failed to preserve the information from putting on certain evidence, permitting the parties to present evidence and argument to the jury regarding the loss of information [and letting the jury draw its own inference], or giving the jury instructions to assist in its evaluation of such evidence or argument.” Id.
Certain sanctions, including the sanctions requested here, can be used only if the court finds that the sanctioned party “acted with the intent to deprive another party of the information’s use in the litigation.” Fed. R. Civ. P. 37(e)(2). The potential sanctions that require a finding of bad intent are (a) a presumption that the lost information was unfavorable to the sanctioned party, (b) an instruction to the jury “that it may or must presume the information was unfavorable to the party,” or (c) entry of a default judgment against the party. Id.
The court is likely to grant one of the sanctions requested in this case because (i) the video recording cannot be restored, (ii) replacement evidence would not be comparable in value or impact to the actual recordings of the incident, and (iii) the supermarket’s owner acted with obvious intent to deprive the woman of the evidence.
Here, the facts indicate that the video recording of the peach-display incident and the woman’s fall had been erased in such a way that its recovery was “impossible” and there are no other video recordings or photographs of the incident. Thus, the court must consider what sanction to impose on the supermarket for failing to preserve that recording.
One factor the court will consider is the extent to which the woman was prejudiced by the destruction of the video recording and whether that prejudice can be cured. It seems likely that the loss of the information (a video recording of the peach-display incident and the woman’s fall, the events that are the subject of the lawsuit) would be highly prejudicial to the woman. Moreover, the fact that the supermarket owner ordered destruction of the video after watching it strongly suggests that information on the video was favorable to the woman and unfavorable to the supermarket. Had the video been favorable to the supermarket, the supermarket owner would probably have preserved it.
It is possible that the woman could offer other proof of the incident at the supermarket (e.g., her own testimony or testimony of eyewitnesses to the incident, including testimony of any store employee who may have seen the peach-display incident and the woman’s fall in person), but such evidence would be less persuasive than the video recording and would be more expensive to find and present at trial. There are measures the court could take that might cure this prejudice to some extent. For example, the court could preclude the supermarket from presenting evidence that challenged the version of events presented by the woman’s witnesses. It could also limit the supermarket’s challenges to the credibility of her witnesses. Finally, it could require the supermarket to compensate the woman for the expense of proving the events that the video recording would have shown. But none of this would fully replace the value of the video recording to the woman’s case, in terms of the recording’s likely impact on the jury and its persuasiveness.
Application
In addition to the significant prejudice suffered by the woman, the court is likely to take into account the fact that the supermarket acted with the requisite state of mind to justify the more severe sanctions allowed under Rule 37(e)(2). The instruction by the supermarket’s owner to destroy the video recording establishes intent by the supermarket to deprive another party of the information on the video recording, especially given that the owner ordered destruction of the video recording after he received a specific request from the woman’s attorney that the supermarket preserve it. Cf. Leon v. IDX Sys. Corp., 464 F.3d 951, 959 (9th Cir. 2006) (use of software to prevent recovery of ESI supports finding of willfulness and bad faith).
The court would have discretion to impose the sanctions specified in Rule 37(e)(2), which include instructing the jury to presume that the lost information was unfavorable to the supermarket or entering a default judgment in favor of the woman. An important consideration in determining an appropriate sanction is that punishment is not the goal of the rules; the supermarket’s intentional destruction of evidence does not necessarily mean that the sanctions should be extreme. Although, as noted above, it does not seem that any alternative evidence could fully replace the impact and value of the missing video recording, a court might conclude that the prejudice to the woman could be cured by allowing her to present other evidence of what happened in the supermarket and by requiring the supermarket to pay her costs of doing so. If the court concluded that this could cure the prejudice to the woman, it could choose to deny her request for either an adverse instruction or a default judgment.
With respect to the request for an adverse inference instruction, in light of the supermarket’s intentional destruction of the video recording of the peach-display incident and the woman’s fall, the court is likely to give an instruction stating that the video recording would have been both relevant to and supportive of the woman’s claim.
Default Judgment
The entry of a default judgment is less likely. If testimony by the woman or supermarket employees is available to reconstruct the incident, the court might find it preferable not to enter a default judgment, but to allow the parties to develop their cases using this other evidence, subject to the presumption that the lost video recording contained evidence favorable to the woman. Cf. Ericksen v. Kaplan Higher Education LLC, 2016 WL 695789 (D. Md. 2016) (declining to dismiss plaintiff’s claim, despite plaintiff’s destruction of potentially relevant evidence, because lesser remedy of restricting plaintiff’s right to present evidence would cure prejudice and dismissal “is thus not a necessary antidote”); Dae Kon Kwon v. Costco Wholesale Corp., 2010 WL 571941 (D. Haw. 2010) (declining to enter a default judgment against a store that destroyed a video recording of an accident in the store pursuant to a routine record-retention policy six days after the incident but granting an adverse inference instruction). Even if the court determines that a default judgment is appropriate, a further hearing on the amount of damages would be required. See Fed. R. Civ. P. 55 (before entry of default judgment, court may conduct a hearing to “determine the amount of damages”).
